As a contrarian investor, I am looking for readings in the reports where large speculators or commercial hedgers are overly bullish or overly bearish. Occasionally, I will notice a pattern in the small speculators as well.

When it comes to the mini S&P contracts, things don’t always work in the usual way.

Back in early June, small speculators had built the biggest long position since October 2008, with over 300,000 contracts being held.

What is peculiar about these two scenarios is that in June, the small speculators were right, as the market rallied during the summer. But being long in October 2008 was a huge mistake.

I bring this up because the small speculators are building a pretty sizable long position again. After being net long less than 28,000 contracts four weeks ago, the group is now net long almost 170,000 contracts.

Over the last two months, most sentiment indicators have shifted drastically from overly bullish to bearish and in some cases overly bearish.

Are small speculators catching on? It is certainly something to keep an eye on.